Market Now Pricing In $770 Billion Increase In Fed Balance Sheet
As we have pointed out previously, the primary if not only driver of relative risk returns (because in a world of relative fiat value destruction, it is all relative, except for gold which is revalued relative to all on a pro rata basis), will be who of the big two - the Fed and the ECB - can print more. And up until now, at least since the end of December when the market "suddenly" realized that the ECB's balance sheet has soared to unseen records, the consensus was that it was the ECB that would be the primary source of easing. Especially when considering that there is another ~€500 billion LTRO due on February 29. Yet today's rapid reversal in the EURUSD, driven by Bernanke's uber-dovish comments suggest that something has changed and that the Fed is now expected to ease substantially. How much? For that we look to the latest balance sheet cross-correlation, where if we go by simple correlation, the market is now pricing in (based on the EURUSD cross ratio) that the relationship of the two balance sheets will rise from a multi year low of 1.08 as of a few days ago to 1.15, at least based on the rapid move in the EURUSD higher as can be seen in the chart below. Indicatively, the actual value of the two balance sheets is €2.706 trillion for the ECB and $2.92 trillion for the Fed (or a 1.08 ratio). So now that the EURUSD has risen as high as it has, it implies that the pro forma "priced in" ratio is about 1.15. But wait: one should also factor in the fact that the ECB's balance sheet will rise by at least another €500 billion in just over a month, which will bring the ECB's balance sheet to €3.2 trillion. Which means that to retain the 1.15 cross balance sheet relationship, the Fed's own balance sheet will have to rise to $3,687 billion, or a whopping $767 billion increase!
Naturally, that's a simple heuristic based on only what the EURUSD pair is implying. Of course, this is not a scientific way of predicting where Bernanke will go, but that is at least what the market seems to be telling us. If the LTRO is much bigger, such as the €1 trillion suggested by CLSA, then the ratio changes, but €500 billion is probably far more realistic at this point.
So at the end of the day, the balance sheets of the world's two biggest central banks will increase by about €500 billion for the ECB and ~$770 for the Fed and $655 billion for the ECB.
Incidentally, this analysis assumes all else equal which, with Greece on the verge of default and Portugal potentially in its footsteps, isn't...
Thus our question is: gold is not on its way to $2000 yet why again?
(13 votes)
»
- Login or register to post comments
- 14011 reads
- Printer-friendly version
- Send to friend
Similar Articles You Might Enjoy:
- Guest Post: Tracking Gold
- Guest Post: Take A Step Back And Look At The Macro Picture
- Guest Post: A Goldman Rebuttal
- JP Morgan Warns Gold to Go Parabolic and Rise to $2,500 By Year End
- Today's Economic Data Docket - Industrial Production And Housing Starts; 12:30pm MerkOzy Press Conference Will Be Market Moving
It'll be as large as it needs to be to squeeze some more life out of this farce.
Silver hasn’t even regained support at 35 dollars, EVEN after such a dovish FOMC – that is a complete JOKE. **LOL**
Silver supply is literally SURGING with these inflated prices. Producers can’t wait to off-load their expensive silver into the greedy hands of redneck silverbugs. It’s only a matter of time before silver reaches FAIR VALUE at $18/oz, much to the dismay of redneck doomers and conspiracy theorist lunatics.
until silver peaks, it will be subject to the slings and arrows of industrial demand's fickle nature.
That said, the good side effect of all this real inflation is that people are going to be eating less.
That will do more to "solve healthcare costs" than anything these moron congressidiots can.
Screw 'healthier sheeple' let them cholesteral and fat themselves to death, who cares?
C'mon, Bernank!
WTF!
770 billion?
That's all you have in the pipeline for now? That won't keep the repository of wealth known as stock market indices from collapsing before November 2nd, you rookie.
That's weak, Cochise. Keynes & Krugman fart in your general direction.
My Fractional Reserve CERN-Megatron Money Multiplier derived equations instruct that a 2.37 trillion USD QE3 wad (over a 6 month time frame, as in full throttle) will have to be fired off in order to have even a 25% chance of replicating the devastating affects of was a 600 billion USD QE1.
I thought The Bernank was a pro?
Maybe Marc Faber was right after all. Maybe The Bernank is an amateur money printer.
Marc Faber: "Next Week We Will See If Bernanke Is A True Money Printer or Just An AmateurI'm surprised the algo-bots didnt throw a tantrum over this meager number....maybe theyre still digesting it.
This shit sucks.
OT but.. Any of you German types know if there is anything to this? ..
http://beforeitsnews.com/story/1675/079/Germany_To_Phase_Out_Cash_August_2012.html
Happening already. Bank cards have chips for cash transactions and checkout counters are recommended to have electronic transaction registers. Regulations for low or no note and coin transactions are not yet in place at the commercial bank level.
ot, but....wal-mart getting rid of overnight greeters.....a few thoughts:
1) i hate going into any store were some unknown fuck inquires about my life,..
b) in effort to improve profits we have eliminated x amount of minimum wage jobs...
iii) is this the ultimate tsunami animal heading to the hills?
I hear there's going to be a self immolation of one or two US soldiers in front of the Whitehouse during this Feb 2nd veterans march for Ron Paul and in protest of the wars. I wonder if the lamestream media will cover this event?
http://www.youtube.com/watch?v=s1hbemJojqI&feature=youtu.be
The Bernank has announced the 770 billion was just the warm up run, after all.
Go, Bernank, Go!
Fed's Bernanke says will consider additional QE if the conditions warrant it01-25 15:32: Fed's Bernanke says will consider additional QE if the conditions warrant it
I am long 30 year treasuries and 3X short the S&P. 94% of my assets are in these two positions. Come and get me.
They're brass , and are the size of cantaloupes
Only pussies jawbone. Print. Just... Do... It...
For long time I expected some positive post from you, you're right on man!
why so much angst? haven't been butt-loved recently?
Short Mar Silver from $33.245 today on the Comex; we'll see how this works out. Taking profit on my $27.00 Long, reported here on the day I put that on.
Paper shuffling works... until it doesn't.
You're a stooper showing off his find.
Did you have to take a vow of celibacy too? as well as the vow of poverty, and the hair shirt? I've never understood the psychology, personally.
Tell it to MF Global clients, you know, the ones with the segregated accounts. Rocks is just tryin to help...
Some people enjoy the paper chase.
The buying of tax software, the keeping up with the latest tax policy changes on investment, the wash sale rule, the filing, being compelled to sign something under penalty of perjury (that one has always been weird), the warm interaction with different bureaucrats sometimes lasting for years over minute details.
I've never understood the psychology either ;-)
think it will rally to 35-36 before a pull back
But think of what that might do to McDonalds!
i agree food security is a concern here. No one is reporting on how the Greeks are actually living...or few actually. Homelessness has soared, crime, begging in the streets. If that's success then what exactly is failure? And if you feel like inserting "like a give a phuck" as a follow on...by all means...cuz you people don't even know where your food comes from...but the people who are making it sure do.
Silver has no 'support' here? Looks great to me...then again I bought most all of my silver back at the first bailout when silver was $6-$8.
ah, the days when I scored 100 ASEs for $652
sheepie, where have you been during todays fireworks?!? more promises at the magic qe3 trough!!! look at them pigs lining up!!! whats that? its empty?!?!?? gasp!!!?? no ACTUAL qe3?!?!? just more hints and innuendo??? cant be!!!
Yep, but apparently 'good enough' to continue 'full retard' at least 1 more day.
Wow theyre getting desperate out there.
I heard supersonic jets start getting squirrely to handle above 55,000 feet when oxygen gets real scarce.
My forays to the stratosphere in my flight simulator confirm that.
not o2, density altitude
I heard supersonic jets start getting squirrely to handle above 55,000 feet when oxygen gets real scarce.
It's not about thin O2, it's about thin air and reduced lift, barely enough lift to keep it flying unless going REAL fast.
With airliners it happens at lower altitude, around 38,000 ft. Barely enough lift in that thin air to keep that heavy jet flying. A sizeable control surface change can kill enough lift to make it drop like a rock down to denser air a few thousand feet below and lift is regained.
It's why airline pilots are advised to leave it on autopilot at high altitude. AP makes tiny little control surface changes that won't affect lift.
Great examples of this phenomenon in the book "Airframe".
Also verified on Flight Simulator in Boeing 777 (about 250 hrs logged).
i share your Q, S_D1!
i read the goldSeek closing report yest, and trader dan said according to his calculations (and i usually agree w/ dan) we needed a close above mid-32 to complete the technical break ^^thru the MDA so this is now confirmation, according to him, i would surmise
NB gold did not lead here: Ag broke thru first (mon) and Au followed today, also by % gain
so, tyler is high on gold, and that's fine, and he may be right about the "cause" being "implied QE" but after 6 months, maybe he should wait another 5-6 more till prez0 gets rollin and the "market" shows its love for him
yes! resistance now = support @ mid-32 zone
been a while for us too, eh? i've been wrong since the last drop and incorrectly "calling" the seasonal pre-Xmas hi-probability ramp. ooops! being wrong has not 'cost' me 10 cents, tho. imagine that! paper value went south, is all. if i must have some cash, the bullion is there. other than that, PMs are "not for now"
GSR = 51.5- what's next? maybe a nice afternoon bike ride? L0L!!!
slewie-ALWAYS a nice day for a bike ride!
YTD up 19.5 percent...
i say no more
except
Got silVer Bitchezz
Yep that's what's happening alright.... delivery time more than doubled for my last order; I wish those fargin producers would just fuck off with all the market flooding already.....
If I don't get those spoons out on time there'll be hell on.....
Oh yeah...... SILVER BEECHES!!
the sale is over soon on silver ...
Lets see how the paper dose with zirp
you mean "interest rates do with ZIRP." there are whales in this ocean too.
I remember when Meth man was calling for $5 silver. He no longer posts here. When Silver is above $50 will you disappear too?
One can hope
Death Race 2000
http://video.google.com/videoplay?docid=5038753379369579653 (1:19:51)
" – that is a complete JOKE. **LOL**"
– I am a complete JOKE. **LOL** (fixed it)
No such thing as fair value with ZIRP.
GeneMarchbanks plus 1
There is negative value >
negative reserves banking system ..the New frontier
Oh yeah there is.
http://i41.tinypic.com/ohimmr.jpg
how come only one dollar bills? why not hundreds instead? or is that...too much money?
Looks like MDB took over Robotard for dumbest troll of the year.. and it's only Jan.
MillionDufusBoner strikes again with his pragmatic precious metal insults. The only thing surging is your record of ignorance regards pm's.
you can say what you will about those of us who draw your ire, but we draw eyeballs.
You people (lemmings) would totally KILL this website if left to your own devices.
lol, you are lumping yourself in with the satire characters now.
Fucking HILARIOUS.
yet when I'm not around you fucking ASK FOR ME by name...you're like the jane in a bukkake
Where exactly did I "ask" for you?
Get over yourself, and this homoerotic thing you seem to have for me.
we do need more girls around here. tis true....
Trav you are fucking pathetic! Go make out with your mum and go back in the basement!
Let me get this straight, your a lawyer and you just wrote that, for what purpose? Holy hell, I hope your not a criminal defense lawyer..
So if u bought it when it was $10 an oz. It's all bad right?????
Dude, shut the fuck up please......
US gold production gains 2.6%, silver declines 8.7% in 2011
http://www.commodityonline.com/news/us-gold-production-gains-26-silver-declines-87-in-2011-45494-3-1.html
Right cause there's just SO much extra Silver out there,, the price just can't wait to drop to $18 per oz? Stupid statements like that will simply get you labeled a COCKSUCKER!
I don't doubt if you are correct, I really don't know one way or the other. Many of my comments regarding silver are assuming that much of the hearsay found here at ZH is correct. One thing I could never figure out is if the biggest silver cheerleader is trying to convince producers to hold back supply to drive prices higher (I don't know this to be true but it has been stated here repeatedly by our silver guys) that might be a sign that a commodity price is being "cornered" and that holding off on purchases might be a good idea. That being said I promise I too will buy some silver next time it drops below 25 bucks an oz. Hell why not get a monster box, just cuz I wanna be in the club too.
I do want to draw attention to the fact that you state US production declines 8.7%.
With some risk of pissing our silver aficionados off, I present the following data (up to 2009). I have seen similar in chart form (growing annual production) but this came up in my google search first.
http://minerals.usgs.gov/ds/2005/140/silver.pdf
Emphasis on the far right column. Is this accurate?
that's UNITED STATES production, idiot...we're a minor player in both markets.
Production peaked for both in the US a LONG time ago.
alright, phucker. Gensler vs Fleckenstein. Who's your money on? I'd go with Fleckenstein...unfortunately we all now know Gensler cheats....
I'll take silver and gold over wood pulp, turned into parchment and inked with a central planning committee numbers.
Recent average Cumulative price of silver
2009 $14.67
2010 $20.19
2011 $35.12
So is the the central planner in you dictating the "fair" price at $18.00? Why don't you go open a mine and sell it at your centrally planned price rather than at marke price. After all it's only $5.00 per oz to dig out of the ground right?
You are an epizoon in economic evolution, where you can only exist by extracting your sustinence in your centrally planned dogmatic outlook and foisting this by BRUTE FORCE on others. Free market forces would eradicate your worthless life draining existance.
If you take silver and gold over wood pulp, why do you then list the prices of silver in wood pulp? By doing so you are admitting an equivalency between the two. You can't have it both ways. Either you are happy with some supply of silver because you are confident in its inherent value (hint: things in nature have no value except what man ascribes) or Federal Reserve Notes are how you actually measure your happiness.
Currency is but the means of determining exchange values between all goods and services. There is nothing inherintly wrong or bad in the concept of currency, quite the contrary this is a major advance in human economic evolution.
A free market driven currency would be superior to a centrally planned politburo driven system of finding relative exchanges between goods and services. If you read the history of metallic currency, you will find central planners attempting to FIX the price of gold or silver either in relation to each other or in relation to units of currency in circulation caused strains in the sysems of exchange. Peter L. Bernstein. The Power of Gold, the history of an obsession. NOTE: This author looks unfavorably on gold silver as a means of currency modulation.
The dollars I quoted and contrasted exist, that is self evident. Similarly silver, gold, oil, wheat, taxi rides, movies, dentist, car wash, retaurant and other commodities, goods and services also exist.
The quotation of cumulative silver prices juxtaposed against centrally planned wood pulp YES is an equivalent. Just as if I quoted silver prices against teddy bears, haircuts or licorice would be an equivalent. Do you understand? I am not denying the existance of paper money as one way of determining exchanges.
The equvalence shows the relationship over time between the two things being compared. If you understand this then you will understand why I choose (at this time not necessarily forever) to hold gold and silver over centrally planned wood pulp and digitised fiat currency. Below I will create some tables of equivalent values that might tease out the meaning of my example more clearly
Year -- 5% Dollar Holing -- Dollar eqivalent Silver 1oz
2009 $14.00 $14
2010 $14.70 $20.19
2011 $15.44 $35.12
Stated another way
Year --Unit silver 1oz -- One Dollar eqivalent YOY change
2009 1 1
2010 1 1.4421 (loss of 44.21% dollar value)
2011 1 1.7395 (loss of 73.95% dollar value)
All that is now required is to add a third and other colums with big macs, taxi rides, teddy bears etc and work out the relative values of exchange, between holding dollars over silver and indeed these items in relation to each other.
My contention is that at this juncture it is superior to hold silver over CENTRALLY PLANNED FIAT ENFORCED paper and digitised currency. However if YOU choose to hold these centrally planned dollars in favor of the commodity. I say simply one thing.
Good luck. You may in fact over time end up ahead on the basis of relative exchanges. I do not believe this will be true. Realise also that equivalence is not "the same" :)
One final thing I will add is that my belief is that everything in nature has intrinsic value. It is man that attempts to attach a price based on his current understanding as the value of a thing. Unless you are omniscient how do you know the value of oil or any natural commodity tomorrow?
For example 500 years ago oil may have had limited human price value. Natures intrinsic value in that oil was always present just not realised. Clean water, arable unpolluted land, fresh air, forest all have some natural intrinsic value. To state that some element has no natural value is to make a statement that you are equivalent to a god as you know the future and that element can be removed for all time as it serves no purpose.
How can anyone know what any natural element is doing as part of the overall system we habitate, and the treasures that this element might hold? The hubris express is monumental and large part why our intelligence combined with fear and greed, could lead to our demise as a species on this planet. Wisdom is not lacking it's is a difficult proposition to sell in the face of inane IQ draining commentary such as your feeble attempt of understanding of money and nature. Imbecillic would perhaps be the closest succinct summation of your contribution today.
Been here 2 years aand 7 weeks. In that time I have read some pretty dumb statements but this ranks on par with the dumbest. Exceptional, in line for MOY award (and yes Trav, you, VCSharp and MDB have drawn eyeballs, but having drawn them to your printed thoughts, it is impossible to undo and you are stuck on record as being either shallow or dumb as dogshit).
which one's? "the one's"?? "the twenty's"? "the hundreds"?
http://www.youtube.com/watch?v=Lx_9gHAz7ao&feature=player_detailpage
man, i gotta learn to play the ukele.
OneDollarBonus_, you should just stop posting on this site. You need to learn how to read a chart, it may help you avoid to look like such an amateur...
MDB LOL,
As long as you hold the GLD and the SLV, they have almost complete control over Silver and Gold. Hey MDB do you really think the price of these PM's are supply and demand? I hold GLD and SLV just to get basement bargain prices on the physical, LOL...
We need Sheeple like MDB to continue spewing the rhetoric so we can store up supplies at a bargain price. Do you think the custodians of these accounts are on the up and up? LOL
MillionDollarBonus....
Let me start by saying ,you make me fucking puke....
You sack of shit.
You know fucking well that silver is "managed" as is gold.
Fuck off and die,douchebag
Really? Well, I sure am glad that my DCA is a lot less than $18/ounce. Guess you were a little late if that happens, eh? But, dumb ass, I don't think you're going to see $18 an ounce silver again.
And then what.
SD1, there is no 'and then what'. You keep trying to apply old rules and laws to a totally different game. They'll change, re-write, and create laws and rules as they go to perpetuate it. What will it look like? Hell, I don't know. But, believing that there will be some sort of correction back to normalcy is delusional (albeit noble).
They've already crossed the barriers of pushing the limits. The limits were breached long ago. They have NO CHOICE but to simply double, triple, quadruple, quintuple, or whatever down over and over and over.
I have something else to tell you, the bull market wasn't real either. Everything since the gold standard was erased in the 70s has been nothing more than a sham. The sham must continue. The sham will continue. And, it will be more extreme, bizarre, ruthless, and horribly 'unfair' as it goes.
I'll be the first to pick up a pitchfork and torch but, come on, they can pull this bullshit for probably another decade. Who the hell is going to stop them? Why would they?
I dont buy the normalcy bias premise that 'this is what theyre just going to keep doing on and on' at all. Something else big is being planned for and set up, and we dont know what it is. I guarantee when it happens one morning everyone will be here saying 'WOW I didnt see that one coming'.
there's nothing PLANNED DUDE. Figure that out. NOBODY IS IN CHARGE.
There are no potent directors; it's why that is the name of a fallacy!
Make as much as you can and get off the train. Who knows what the future holds but it isn't going to be better than today. You're warned.
based on your future, what does one hold to protect ones assets after getting off the train?
The same thing you would want when getting off the train in any other lawless society. Lawyers, guns and money.
lawyers in a lawless society?
Of course. We've got plenty of lawyers, don't we?
Lawyers are the ones that allow the rich to get around the rules that "are only meant for the little people".
last i checked this country is choc full of attorneys and plenty of laws to feed off...sense the correlation there tmos?
Plenty of laws, and yet we are lawless.
Like being adrift in the middle of the ocean. Laws, laws everywhere, but no rule of law to be found.
Plenty of laws for you the peasant or piss ant. Of course, none of the laws apply to "them" because there is no controlling legal authority. Like having a President that is not a Natural born citizen. So what? WTF are you, the pissant, going to do about it?
Like you steal $5 from walmart and the black suited cops in tactical gear will beat you bloody and lock you up for a year, take your kids away, and take your car and home. Joo bank CEO robs trillions, gets fined 1.1 million, and does not admint guilt.
That's called a lawless society. Plenty of laws, just not for them.
+1 Greenie
This is one of your better comments Tmos.
haha! Save that one Tmos!
Silver. For Real. I'm serious. Been serious for twenty years. All my real savings that are going to the grandchildren are in bullion. It's real money.
Only as real as your fellow man believes. If I said "fingernail clippings are money!" then I'd be crazy... unless a large number of other people agreed. Think a bit deeper.
No. Like fiat currencies you'd have to force people under threat of violence to use fingernail clippings for trade. The PTB wouldn't like it at all anyway: everyone has access to fingernail clippings.
IMO, you're the one who needs to have a good think or two.
Try starting here,
If no one was pointing a gun at your head, which would you value more highly:
a) An incredibly useful item that you know for a fact that someone had to work to procure
or
b) A bit of paper that says someone, sometime, might have done, or might do, some work at some point, unless they happened to have access to a printing press paid for by you, in which case they got it for less than nothing.
(?)
RE my earlier post stating that your earlier comment was the dumbest I'd read in a long time........ I was mistaken. You just topped it.
Take your own advice and do some reasearch so that you can think deeper. Answer this question: What is money?
Follow up by answering the next: What are the 5 properties of money? (ie. What things must be able to do for users, for it to be deemed money? Not currency, money. There is a distinction.)
Don't take too long now, you are being left behind.
Youve got to be on crack to believe the events have just unfolded totaly unscripted and day to day...its all been planned, the 'collapse' of 2008 was a total scam to scare everyone into beginning the monetization of the debt, plain and simple its ALL planned and youre an idiot if you actually believe theyre just flying by the seat of their pants day after day.
Put a large number of individuals in a bad system and evil emerges. Evil far greater than was the intent of any one individual within the system, even if individuals try to manage the system.
Read up on the Stanford Prison Experiment, specifically Zimbardo's role as warden.
This is the inevitable result of a system based on ever more violation of natural rights.
Of course this is correct. Human brains contain a story module that is forever occupied trying to make a story that fits whatever inputs it has; but there isn't any story; "the Powers", who are almost entirely powerless, are just winging it from week to week. They are often surprised at the result of their acouncements, etc. There's no plan.
Youre delusional. Your mind is the one making events fit into 'normalcy bias' and believing its all just reacting to problems no one saw coming at all, much less planned....delusion.
no, you are the delusional...paranoid too.
You need to look up normalcy bias because it doesn't gel with your usage of it